The present application is directed to a financial investment system which is available to a host of users over a public network.
The INTERNET has introduced new ways for carrying on business and provides individuals with a simple procedure for investigating new purchases. Webpages have replaced physical places of business and also act to market the particular wares or services of particular companies and individuals. Such webpages typically, are freely available to anyone having a computer and INTERNET access. The wide access to a host of potential clients and the ability to inexpensively provide detailed information to such clients has changed the way business is conducted.
Investors now have the capability of tracking their investments over the INTERNET as well as conducting research and providing instructions with respect to trades through online brokers. An investor can research a host of different mutual funds which all allegedly reduce the investment risk due to diversification. These mutual funds are managed by an advisor or fund manager and provide an effective investment vehicle, particularly where the amount to be invested is small. A certain fee is paid by the investor for the professional expertise provided in the administration and investment direction of the fund. The individual investor does not have any control of the fund other than whether to invest or divest themselves of the particular fund. The amount of timely information that is available with respect to actual trade activities of the fund is limited and summarized. Therefore, the actual day to day decisions of the fund manager are hidden and difficult, if not impossible, to evaluate.
A different form of investing is direct purchase of stocks through a broker or electronic discount brokerage service. In the case of a broker, the stock selection is ultimately determined by the investor but this decision is often made based on the broker's recommendation. Research can be provided to assist the investor in evaluating the recommendations. Independent third party tracking of the particular advice provided by the broker is not normally available and thus, it is typically up to the investor to record and maintain such data. This requires considerable discipline and typically is inaccurate over time.
Another issue with respect to a broker is the possibility of “churn”, which refers to the practice of buying and selling stocks for the primary purpose of increasing commissions without necessarily creating additional value for the investor.
This practice is difficult for the individual investor to evaluate and leads to increased uncertainty.
Investors are often influenced by “a hot tip”. The “hot tip” may originate with a friend or colleague who is recommending a particular stock. On occasion, brokers also contact investors recommending a particular investment. Nervous or careful investors may be concerned due to a possible conflict of interest. It would be desirable to have historical data with respect to the performance of the broker's recommendations over time. Similar tracking of the performance of a colleague's previous recommendations would be desirable to assist the investor in making a sound financial decision. Further, there is no independently audited information as to whether the provider of such “hot tip” actually acted on his/her own advice. In fact, it has been an investment industry practice to specifically deny any correlation between advice and actual trading activities. In some cases, a broker may be recommending to buy a given stock while his/her brokerage is in fact selling.
Some investors group together and form a stock club and purchase investments on their group's behalf. It would also be desirable for individual club members to be able to consistently evaluate the stock club's performance relative to other investor's funds and to provide a more convenient vehicle for individual members of the club to join or leave in an equitable manner.
The present invention addresses a number of these problems and provides a different method and system for investment.